HC Deb 06 November 1980 vol 991 cc1453-5
14. Mr. Dubs

asked the Chancellor of the Exchequer if he is satisfied that recent trends in key economic indicators, especially unemployment, interest rates, and money supply confirm that his economic policies are proving effective.

Mr. Biffen

I am convinced that the Government's policies offer the best prospects for a stronger economy with higher employment and lower inflation.

Mr. Dubs

Is the right hon. Gentleman aware that his answer effectively means "No"? Will he tell the House whether he is depending upon a decline in inflation as the only way of getting the economy into working order, or does he have other policies that he will bring forward at the appropriate time?

Mr. Biffen

A fall in inflation and the restoration of greater monetary stability would be good preconditions for a revival in economic activity. The taxation changes that were made during the first few months of this Government are equipping people to respond to those chances when they arise. The same is true of all the other measures designed to liberalise the economy—for example, the scrapping of exchange control, the scrapping of price control, the scrapping of dividend control and the ending of the vestiges of pay policy. These were all deliberate attempts to place opportunities before the British people rather than have them concentrated in political hands.

Mr. Lyell

My right hon. Friends seek to keep Government borrowing under control, but will they recall that the increase in pay in August of 22 per cent. was generally recognised to be excessive? As they come to find measures to narrow the borrowing gap, will they not be too afraid of increases in indirect taxation to make a contribution to narrowing the gap?

Mr. Biffen

I have noted my hon. Friend's fascinating suggestion. I shall retreat behind the time-honoured formula of saying that I cannot anticipate the Budget of my right hon. and learned Friend.

Mr. Denzil Davies

Does the right hon. Gentleman agree that the only things that Treasury Ministers have achieved in the past 18 months, if that is the right word, are high inflation, soaring unemployment, exhorbitant interest rates, high Government borrowing and the virtual destruction of half of British industry? In those circumstances, would it not be the honourable thing for him and other Treasury Ministers to resign?

Mr. Biffen

No. We are engaged on a policy for the lifetime of a Government. We are determined to chance our successes against what the right hon. Gentleman asserts are our faults and failures. When the right hon. Gentleman recited his catalogue of gloom with all the authority of a Welsh valley wet Sunday afternoon preacher he omitted to mention that we now have a falling rate of inflation and the lowest level of industrial disputes for 30 years. Those factors must be put in the balance.

Mr. Latham

Is my right hon. Friend satisfied that he has sufficient influence and/or powers to control the level of pay increases in the nationalised industries?

Mr. Biffen

This is an area where one moves and learns by experience.

Mr. Geoffrey Robinson

In view of the previous answer given by the right hon. Gentleman to the effect that the relationship between the money supply and inflation is so imprecise that he could offer neither estimate nor prediction, does he agree that the money supply is almost useless as a tool of economic management?

Mr. Biffen

Certainly not. The very imprecision in some circumstances can be of great assistance.